Accounts receivable turnover Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period. Average collection period: Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average. (a) To calculate: The accounts receivable turnover of Company A and Incorporation B.
Accounts receivable turnover Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period. Average collection period: Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average. (a) To calculate: The accounts receivable turnover of Company A and Incorporation B.
Solution Summary: The author calculates the accounts receivable turnover ratio for Company A and Incorporation B.
Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.
Chapter 8, Problem 1ADM
A.
To determine
Accounts receivable turnover
Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.
Average collection period:
Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.
(a)
To calculate: The accounts receivable turnover of Company A and Incorporation B.
B.
To determine
To calculate: The day’s sales in receivables of Company A and Incorporation B.
C.
To determine
To evaluate: The relative efficiency between Company A and Incorporation B in collecting accounts receivables.
D.
To determine
To explain: The possible reason for the difference in average accounts receivable turnover ratio for Company B and Incorporation A.
The learning curve concept suggests: (a) Unit costs decrease with experience (b) Fixed costs vary with volume (c) Quality decreases over time (d) Costs increase with production
On January 1, Crestview Finance lends a corporate client $195,000 at an annual interest rate of 6.8%. What is the amount of interest revenue that should be recorded for the quarter ending March 31?
Accounting question
Chapter 8 Solutions
Financial & Managerial Accounting, Loose-Leaf Version